Leadership and Digital Transformation in the AI Era
By Manasi Bharati, Senior Psychology Consultant
Picture this: A Fortune 500 company spends 18 months and $50 million implementing a cutting-edge AI-powered analytics platform. The technology is flawless. The strategy is sound. Six months later, most employees still use Excel spreadsheets for their daily work. Sound familiar?
This scenario plays out across industries every day. Studies show that digital transformation is indeed a challenging endeavour. McKinsey notes that around 70% transformation programmes fall short of their goals (Garcia, 2024), while Gartner (2025) reports that less than half of digital initiatives (48%) actually hit or exceed their targets. The cost of these misfires is staggering. Globally, businesses lose an estimated $2.3 trillion each year on failed change efforts (Harkin, 2024). What’s striking is that the problem is rarely about a lack of vision; it’s almost always about ignoring the human reality of change and how well the change is executed.
"The most significant factors that lead to a lack of success in transformation programs revolve around people. Some organizations appear to have forgotten that it’s the people within the company, their relationships, and how they are led and managed that drive transformational change"
For decades, leaders have relied on traditional change models as if transformation could be mapped neatly onto a timeline – whether it is Lewin’s “unfreeze-change-refreeze” model, Kotter’s 8-step process, or other models. These frameworks assumed change was episodic, predictable, and controllable. Leaders would announce a vision, execute a plan, and eventually “refreeze” into a new steady state. But in the AI era, those assumptions are obsolete.
The new reality of change
Change is no longer episodic – it’s constant, it’s dynamic, it’s erratic. AI capabilities double every few months. ChatGPT reached 100 million users in just two months. Entire business models can disappear overnight, while new ones emerge seemingly from nowhere. Customer expectations shift in real-time. There is no “refreeze” anymore.
This fundamentally changes what leadership means. Traditional change leadership was about designing and communicating a plan. Today’s leaders must cultivate adaptability – helping people experiment, learn, and evolve at pace. It’s not about commanding certainty, but about creating clarity in uncertainty and building resilience that allows teams to perform, regardless of how the landscape shifts.
Here’s the hard truth most leaders miss: transformation fails when people don’t change their daily behaviours. Tools get installed. Strategies get communicated. Processes get documented. Yet people continue making decisions, interacting, and working exactly as they did before. Without behavioural adoption, transformation remains cosmetic.
At FabricShift, we believe that behaviour is the true currency of change. Real transformation doesn’t happen when people comply with new rules; it happens when new behaviours become natural, purposeful, and sustained.
The FabricShift Change Model: Behaviour at the core
Our approach blends behavioural science, systems thinking, and performance psychology into a framework built for continuous transformation. Rather than managing linear phases, it creates an adaptive cycle that puts people – not processes – at the centre. Our five stages work together to move people through the real psychological journey of change.
The five stages work together to move people through the real psychological journey of change:
Anchor: Rather than simply announcing a vision, we connect change to purpose – both organisational mission and personal meaning.
Shift: Instead of rolling out broad training programs, we create momentum through small, visible micro-behaviours that prove progress is possible.
Enable: Beyond installing new systems, we design processes and incentives that make the right behaviours easier than the wrong ones. We automate data entry where possible, gamify adoption milestones, and remove friction from daily workflows.
Sustain: Rather than simply monitoring compliance, we embed new habits through ongoing coaching, reflection, and reinforcement. Weekly one-on-ones include habit check-ins, creating accountability that feels supportive rather than punitive.
Amplify: Instead of declaring success and moving on, we scale behaviours into culture by tying them visibly to business results.
This isn’t about managing a one-time event. It’s about leading an ongoing cycle of adaptation and helping people move from resistance to experimentation, from effort to confidence, and ultimately, from compliance to advocacy.
Transformation in practice: Going beyond theory
We bring this philosophy to life in our Business Transformation Programme. Rather than treating digital change adoption as a software rollout, we approach it as a behavioural transformation that requires new leadership muscles. Our 7-step journey moves participants through diagnostics, design, awareness building, intensive workshops, habit formation cycles, reflection, and continuous evaluation. At each stage, leaders apply the FabricShift model to embed daily behaviours that make the change a growth engine, not just a compliance requirement.
The AI revolution isn’t slowing down; it is only accelerating. Leaders who succeed in this environment won’t be those who perfect change management processes. They will be those who build organisations that adapt, learn, and evolve as naturally as they breathe. The question isn’t whether change is coming to your organisation (because it has already crept its way into our lives!). It is whether your people will drive it or be driven by it. The answer lies not in your strategy or technology but in the daily behaviours of every person on your team. That is where real transformation begins. And where sustainable competitive advantage lives.
Ready to transform how your organisation approaches change? Discover how the FabricShift methodology can transform your next initiative from a tick-box exercise into a lasting behavioural revolution.
Fill out the form below and get access to our Change Model overview
*By submitting this form you are agreeing to our privacy policy.
References:
Garcia, J. (2024). Common pitfalls in transformations: A conversation with Jon Garcia. McKinsey Transformation. Retrieved from: Common pitfalls in transformations: A conversation with Jon Garcia | McKinsey
Gartner (2024). Priorities CIOs Must Address in 2025, According to Gartner’s CIO Survey. Gartner. Retrieved from: Priorities CIOs Must Address in 2025 | Insights from the 2025 Gartner CIO Survey
Harkin, B. (2024). $2.3trillion Wasted Globally in Failed Digital Transformation Programs – Costly and Complex Business Strategies are ‘Not Necessary’. Taylor & Francis. Retrieved from: $2.3trillion Wasted Globally in Failed Digital Transformation Programs – Costly and Complex Business Strategies are ‘Not Necessary’ – Taylor & Francis Newsroom
